I want to discuss about a very important and strategic fact about the lithium business which I think the Australian deposits are very important for the world lithium producers and mining majors, even for the vehicle manufacturers.
Why is LTR's deposit the most important one in Australia?
What makes Australian hard rock resources so important.
- It is because Australia has the best securely and economically mineable HARD ROCK SPODUMENE RESOURCES in the world
- High power batteries need to be made by Lithium Hydroxide.
- Producing Lithium Hydroxide directly from spodumene based resource is much cheaper than Lithium Brine resource. (there are other disadvantages of Lithium brine production). Despite producing Lithium Carbonate from Lithium Brine is cheaper than producing Lithium Carbonate from hard rock spodumene.
Here is the table explaining all cost issues.
It's cheaper to produce lithium carbonate from brine ($4,165/t) than producing from hard rock spodumene ($5,500/t).
However it's cheaper to produce lithium hydroxide directly from hard rock spodumene ($5,300/t) than producing it lithium carbonate which is produced from lithium brine ($6,165/t)
According to Benchmark Mineral Intelligence, Tesla’s new Nevada “gigafactory” will need an estimated 24,000 tonnes of lithium hydroxide annually out of a market of 50,000 tonnes.
Due to their simple metallurgy, the spodumene deposits can be rapidly moved from exploration to development and can be easily converted into important lithium concentrates used in an array of industrial applications, including batteries for electric vehicles and mobile electronics.
Hard rock lithium has strategic advantages in dynamic lithium markets compared to brine deposits. Extracting lithium concentrate from brine waters involves evaporation in large ponds, which may take over a year or more.
Hard rock lithium, on the other hand, is easier to explore, mine and process using low-cost mining methods.
Hard rock lithium mining also has few environmental risks that may hold up permitting.
I know a lot of people are aware of all these issues but in my opinion, the 10%-20% lower production cost difference of producing Lithium Hydroxide from spodumene based hard rock resources make those type of deposits very strategic. (there is other disadvantages if lithium brine, it also relays on the suitable weather)
As you can see from the table below, there aren't many spodumene based resources in the world. Not even any available to buy out over 50mt without paying a high premium over to a previous purchase as a benchmark. (High risk African country resources are not included in the table)
LTR's Kathleen Valley project has maiden resource of 21mt however the target resource upgrade is over 50mt.
Buldania Project resource is not included in the table as it's not defined and no target resource is mentioned by the company.
The largest hard rock resources are all in Australia (WA) as seen on the table.
World Lithium Monopoly
SQM and FMC (Now Livent) are the biggest brine lithium producers in the world.
- SQM, Albemarle and Tianqi hold hard rock resources;
- SQM has 50% of Kidman's Earl Grey deposit in Australia.
- Albemarle (49%) and Tianqi (51%) partners of Greenbushes
- FMC (now Livent) which is the world leader in lithium production, does not have any hard rock lithium resource in Australia.
FMC (now Livent) which is the world leader in lithium production, does not have any hard rock lithium resource in Australia.
And the CEO of Livent said (on the news of Financial Times on March 27 2019) that they were looking at low cost high quality assets in Argentina and Australia.
"We are looking now. We're talking to people now," said Mr Graves.. "A good resource is all we care about"
"Mr Graves said it was looking to acquire another lithium brine resource in Argentina and also wanted to have a lithium mine in Australia, where the chemical is extracted from hard rock"
"We will acquire a hard rock resource if we can. It's got to be a high quality resource, a long life resource"
It would be also very nice to see SQM and Livent as partners in Australia.What do BHP, RIO and FMG, the Australian majors think about lithium business?
I have no idea what BHP is thinking or doing about lithium business. I haven't heard anything yet.
Rio Tinto already have Jadar project in Serbia which is a significant, world-class jadarite (Jadarite is a unique mineral, containing lithium and boron). However in Jan. 2018, Rio Tinto announced it would expedite plans to develop its Jadar project, which it claims could supply more than 10% of global lithium demand when it comes into production in 2023. I don't know what RIO is doing about lithium business atm.
FMG (Foretesue Metals) have been exploring for lithium in its iron ore heartland in WA where Pilbara Minerals and Altura Mining already have lithium mines. However Chief executive Elizabeth Gaines said last month that Fortescue's lithium ambitions remained focused on exploration but it didn’t have a closed mind on acquiring a stake or control of existing projects.
Just before he stepped down as Fortescue chief executive in February last year, Nev Power said the company was “looking for elephants in elephant country” in terms of lithium exploration in WA’s Pilbara region.
As a last word; Livent (ex FMC Corp) and FMG are the majors most probably looking to buy hard rock lithium resources in Australia.
RIO and BHP might be going under the radar. However I am not expecting a big move from them atm. Maybe later.
Tianqi and Albemarle are busy to upgrade their Greenbushes operations. Tianqi already have ~24% of SQM, and SQM have 50% of Earl Grey deposit. Albemarle also 50% of Wodgina deposit together with Mineral resources. So they are loaded up with a lots of lithium and bust with expanding and constructing refinery plants.
(20min delay)